Suggest a new Definition
Proposed definitions will be considered for inclusion in the Economictimes.com
Definition: Proportional tax is the taxing mechanism in which the taxing authority charges the same rate of tax from each taxpayer, irrespective of income. This means that lower class, or middle class, or upper class people pay the same amount of tax. Since the tax is charged at a flat rate for everyone, whether earning higher income or lower income, it is also called flat tax.
Description: Proportional tax is based on the theory that since everybody is equal, taxes should also be charged the same way.
It is unfair to charge more from anybody having a higher income. The government charges a flat rate of 30% on the income earned by the companies in India, exclusive of surcharge and educational cess. A surcharge of 10% and a cess of (2%+ SHEC 1%) are collected on the tax amount collected.